What's Up With Changing Solar Rates?

What? Energy Rates are Different for Existing Homes Vs New Builds?

(AS OF APRIL 15, 2023)

Here’s What You Need to Know About California’s Net Energy Metering (NEM):

Net Energy Metering describes a billing structure between utilities and homeowners with solar. Under net metering, solar owners earn credit for the excess electricity they push onto the grid when their panels are producing more electricity than their home is using.

NEM 3 went into effect at midnight on April 14, 2023, So if you’re buying a new build or installing solar on an existing home,  you can no longer lock in NEM 2 rates.

After years of back and forth before coming to a proposed decision, on December 15, 2022, the California Public Utilities Commission (CPUC) voted unanimously to approve California’s third iteration of net metering, or NEM 3.0. Under the new tariff, NEM 3.0 will significantly reduce net metering compensation rates for new California solar customers (by about 75 percent) – you only had through April 14, 2023, to submit a completed interconnection application and lock in NEM 2.0 rates for 20 years. Here’s what you need to know:

The change that started on April 15th changed the net metering program. Net metering allows you to connect your solar system to the grid. You use your own energy when you need it and the solar energy you send back to the grid, you get a bill credit for that. 

But, starting April 15th, the value of the bill credit dropped drastically. Before April 15, when your solar system was producing energy, you sent that energy to the grid. If was 25 cents they charged you for a kilowatt, they gave you 25 cents credit and it offset your bill. Starting April 15th, they still charge 25 cents, but they only give you .04 cents for what you produce and send to the grid. That’s the reduction in value.

One of the CPUC’s goals is to try to get more people to install $15,000 batteries with their solar system so you store all that excess energy during the day and you use it in the evening when electricity rates go up, and that stored energy can be shared with the grid during high demand periods.

What if you buy a house with solar?

If you buy a house with solar panels after April 14, 2023, you’ll be under the net metering rate plan of the original property owner – so, if the previous homeowners were grandfathered into NEM 1.0 or NEM 2.0, you will be too.

What if I didn’t have a solar contract approved prior to April 15? 

Here’s what you need to know, and how you can maximize your savings installing solar going forward:

• California utility companies significantly raised electricity prices in 2023, meaning home solar is still worth it despite lower compensation for the electricity you send to the grid under NEM 3.
• In tandem with the NEM 3 decision, the California Public Utilities Commission increased funding for their Self-Generation Incentive Program (available July 1, 2023), which means you can earn a $1,500 to $10,000 rebate if you install a battery with your solar panel system.
• You’ll save about $21,600 to $43,900 more with a solar-plus-battery system compared to a solar-only system under NEM 3, depending on which utility’s service territory you are in.
• You’ll lock in 9 years of higher rates for the electricity you export if you connect your system to the electricity grid in 2023. 
• Throughout the end of 2023, your utility company will still compensate you for exports based on NEM 2 rates even if you didn’t meet the cutoff date.